ORANGE COUNTY IN BANKRUPTCY : Deeper Budget Cuts Ordered by Popejoy : Government: County executive is reportedly 'not happy' with first round of proposed reductions. Agencies must slash $60 million more in jobs and services, sources say.

SANTA ANA — Despite dramatic cuts already made to the county's bleak budget, Orange County Chief Executive Officer William J. Popejoy on Monday ordered top officials to make even more substantial reductions to their departments as he prepares to lay the framework of his bankruptcy recovery plan.

"He was not happy with the first round of (proposed) cuts," said Paul S. Nussbaum, a Wells Fargo Bank executive assisting Popejoy with the county's recovery efforts. "As in any budget process, there's a refinement that goes on. It's exactly what goes on in the private sector. They submit a budget, and then we negotiate."

Popejoy is expected today to give a presentation to the Board of Supervisors, announcing the scope of cuts and layoffs for the next fiscal year, which begins July 1. In previous memos to the board, he has indicated the latest round of cuts could result in as many as 2,000 layoffs.

Nussbaum said county budget officials and department heads worked over the weekend trying to figure out a way to cover a revenue shortfall of $188 million in the next fiscal year. With revenue expected to be only $275 million, the county may have to operate at a deficit, Popejoy has said.

In other developments Monday:

* County officials said their former public relations firm is threatening to sue the county for refusing to pay the firm's bill. Supervisors have balked at paying the tab of Sitrick & Co., saying they believe the expenses were inflated.

The firm, which specializes in bankruptcies, was brought in last December to handle media inquiries. It submitted nearly $250,000 in invoices for three weeks' work in December, charging as much as $350 an hour. Sitrick employees also worked for the county through January.

Michael Sitrick, president of the Los Angeles-based firm, declined to discuss the controversy over his firm's bill or whether he plans to take action against the county in court.

* Popejoy proposed early retirement incentives to lure an additional 200 to 400 more employees out the door and save up to $22 million. Under a plan being brought to the Board of Supervisors today, employees who retire early could use money from unused sick time, vacation time and compensation time and apply it to pension contributions, earning up to two additional years of service.

* Supervisors said they will consider a fee hike today that would enable the treasurer-tax collector's office to charge $48 to collect delinquent tax bills. The new fee would cover the costs associated with collecting on delinquent bills, county officials said.

Although county departments heads were initially told to cut their budgets by 28%, Popejoy said they would have to do much more to meet next year's projected revenue of $275 million, about 40% less than the current fiscal year's revenue of $463 million.

County sources said that total reductions by department heads were at least $60 million short of what Popejoy expected. They were expected to work late into the evening with the goal of making the county's expenses match its revenues, sources said.

Privately, some department heads were grumbling over the size of the cuts they are being asked to make. Some fear there will be little left of county government once the cuts are implemented.

Nonetheless, all the department heads are trying to meet Popejoy's budget expectations.

"There's a time to lead and a time to follow and be a good soldier, and right now I guess it's time to be a good soldier," said Health Care Agency Director Tom Uram, who helped identify more than $30 million in cuts in the county's overall budget last December.

Supervisors have given broad authority to Popejoy, which he has seemed more than willing to use to exert pressure on uncooperative department heads and even supervisors who resist cutting their budgets.

Last week, Popejoy wrote a scathing memo to Supervisor Jim Silva, telling him that his refusal to slash his budget was "an insult" to Orange County residents. Silva later reconsidered and announced cuts in his budget, as did all the other supervisors.

Supervisor William G. Steiner said that Popejoy is proving to be a strong-willed executive intent on paring down county government.

"If department heads had any doubt about whether Popejoy is in charge or means business, they should take a look at what the Board of Supervisors have done to their own budgets last week. We jumped through the hoop," Steiner said.

Steiner said a 10% reduction in the county's 15,000-member work force may seem like a lot of layoffs in the public sector but is fairly routine in the private sector.

"I think that's where Popejoy is coming from," Steiner said. "He may find it is a little more difficult to do in the public sector."

Since the bankruptcy, the county has laid off slightly more than 200 employees and has eliminated another 450 vacant positions. Steiner said there are another 1,700 vacant positions that may be cut to soften the blow of layoffs expected today.

"But there's still going to be a lot of people hitting the streets," Steiner said.

Times staff writers Jodi Wilgoren and Eric Bailey contributed to this report.